Data on payments made for legal resolutions such as damages, settlements, and fines are difficult to obtain (See my post of Dec. 17, 2008: settlements with 26 references cited.). Let’s call them collectively “legal resolution costs.”

What would be useful to know is a typical balance between total legal spending – inside costs and external fees paid – and legal resolution costs. Some data is available. Based on a recent General Counsel Roundtable benchmark study, the ratio is around four to one between total legal spending and legal resolution costs. https://gcr.executiveboard.com/Public/Default.aspx

Let’s translate that benchmark into dollars for the typical distribution in a law department where 60 percent of its total legal spend goes to law firms or vendors and 40 percent to its internal costs. If I have my math right, that means for every $1 million paid in legal resolution costs, the median law department spends about $1.6 million on its own lawyers and staff and $2.4 million on outside counsel. Stated the other way around, for every $1 million spent internally and externally, the law department that conforms to this benchmark ratio spends $250,000 on legal resolution costs.